6: Funding, Budgeting, and Transactional Details


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“Without funding, every area-wide plan is just that, a plan. To actualize a plan for your community, funding must be a consideration from the start, so the pie in the sky can become very real. Recognize that no area-wide plan has ever been achieved with one source of funding; funds must come from a multitude of sources and methods to achieve success. And these sources of funding must be considered partners and stakeholders and treated as such."

- Scott Wilson Badenoch Jr., Esq., MDR, Founder, BRIGHT

This chapter focuses on ways to fund your Corridor Project. The tools listed below are only a starting point. It often helps to think creatively for additional funding opportunities. Remember, where there’s a will, there’s a way!


Introduction


Tools
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Introduction

One of the most important aspects of any Corridor Project is obtaining the necessary funds. This chapter will explain different opportunities available to communities to raise these funds. While communities are often able to raise small amounts of capital from crowdfunding, successful Corridor Projects almost always require outside financing due to the cost. Don’t let this necessity be an impediment to creating a more beneficial community through your Corridor Project. Rather, think about your community’s competitive advantages and how to create a strategic vision for well-managed development. Think “what do we want to be” rather than “how do we pay for it.” One way to think about this is to choose a location for the revitalization project that bridges areas of the city together. More foot traffic=more business=more money. Once you create the vision, accept input not substitutions. Let this chapter guide you through the opportunities available at your disposal.

While reading this chapter, think about the way these financial resources can be combined to give you the greatest financial leverage and flexibility. Think about how one large source of funding can be used to draw additional sources of financing and how these financial resources can decrease the financial risk of one (or more) financial sources failing to materialize. One example is to obtain a large anchor tenant (such as a grocery store) in a shopping center. This anchor tenant draws in other tenants, and in turn these additional tenants will make it easier for you to obtain loans from financial institutions and will decrease the risk associated with one of the tenants walking away.

Another aspect to examine is how the end uses in your community can fund your revitalization project. For example, creating a water/solar reclamation plant can lead to financing through potential grants and tax credits as seen below, while also enticing banks, foundations, and environmentally friendly organizations to invest in your community. This approach can maximize community resources by generating additional outside capital which reduces the necessity for communities to fund every aspect of a revitalization plan. 

Information is key to successfully funding your community revitalization plan. When starting, it is helpful to obtain information from community development financial institutions, community development corporations/agencies, and/or Community Reinvestment Act functions of banks. In addition, collecting data on the process (initial investment, projected profit per tenant, etc.) will greatly increase the likelihood of successful financing of your community revitalization project. This data should be kept in a budget which is regularly updated. Some examples can be found here: 

A strong community revitalization financing plan incorporates the following: 

  • Form a multi-sector team - This may include participants from public, private, community investment, philanthropic, and civic sectors. It also requires you to build the policies, processes, mechanisms, and incentives that facilitate community investment
  • Integrate new stakeholders - Identify and recruit institutions/individuals that fill funding or knowledge gaps
  • Secure new resources for community investment
  • Align resources and attention - Ensure there is a coherent, community-endorsed vision to shape investments. Keep in mind that actors maximize their contributions to the redevelopment process as a whole
  • Provide data (transparent and accessible)
  • Advocate for supportive policies - For example, support policies and practices that advance community investment priorities. Additionally, generate deals and projects that together add up to the realization of the community’s strategic priorities. Direct money to highest priorities

Last, don’t be afraid to break up your revitalization plan into smaller units. Often it is easier to complete smaller individual projects than one large revitalization plan.



State-Specific Sources of Capital
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Resiliency Corridors
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State-Specific Sources of Capital

This section covers financial opportunities in the DC area. The reader should use this to guide their efforts in determining what kind of financial opportunities may be available in their own local area.

Some DC incentives include:

Solar Renewable Energy Credits:

These are credits issued for every megawatt hour (MWh) of solar electricity generated and can be sold to electricity providers (DC rate is $480/MWH).

Site Acquisition Funding Initiative:

Loans to fund acquisition and predevelopment costs to nonprofit developers committed to the production, rehabilitation, and preservation of affordable housing.

EnergySmart Initiatives:

Helping low-income customers reduce their energy bills through purchasing renewable energy and increasing energy efficiency.

  • Low-Income Home Energy Assistance Program: Provides bill payment assistance, energy crisis assistance, and weatherization and energy-related home repairs to income-qualified residents.
  • Affordable Solar Program: Free solar panel systems for income-qualified tenants and homeowners
  • Solar for All Community Solar and Strategic Partnerships
  • Programs for installation of solar
  • Weatherization Assistance Program: Provides technical and financial assistance to help low-income residents reduce their energy bills through improvements in energy efficiency. [Federally Funded]

RiverSmart Washington (DC Initiatives to install green infrastructure):

  • Community Stormwater Solutions Grants: Awards start-up funding ($5,000- $20,000) for community-oriented projects aimed at improving stormwater management in the District.
  • RiverSmart Rewards Program: Provides discounts (up to 55%) of the Stormwater Fee and 4% of Clean Rivers Impervious Area Charge to residents, businesses, and property owners that install green infrastructure.
  • RiverSmart Communities Program: Rebates up to 80% of project costs of low impact development practices targeting multi-family residences, small locally-owned businesses, and houses of worship.
  • Stormwater Retention Credits: Issued to properties that manage stormwater voluntarily (can be sold to larger development sites)

Supermarket Tax Credit:

DC initiative that waives certain taxes and fees to supermarkets choosing to locate in underserved areas 

Office of the Deputy Mayor of Planning and Economic Development:

  • DC Revenue Bond Program: Provides below market interest rate loans to help lower cost of funds available for capital projects.
  • New Communities Initiative: The initiative is designed to revitalize severely distressed subsidized housing and redevelop neighborhoods into vibrant mixed-income communities. The Initiative includes four neighborhoods in the District of Columbia: Barry Farm in Ward 8, Lincoln Heights-Richardson Dwelling in Ward 7, Northwest One in Ward 6, and Park Morton in Ward 1. The New Communities Initiative is funded through public bond financing that allows the District to leverage funding for development projects.
  • Great Streets Retail Grants: Commercial revitalization initiative to support existing small businesses, attract new businesses, increase the District’s tax base, create new job opportunities for the District residents, and transform emerging corridors into thriving and inviting neighborhood centers that are magnets for private investment. Offers up to 50K Small Business Reimbursement Grants for those who want to improve their businesses.

Opportunities that may be expired

  • Clean Lands Fund: The Brownfield Revitalization Act establishes the Voluntary Cleanup Program. It provides for assistance with site assessments, as well as financial assistance in the form of both grants and loans, subject to the availability of funds in the Clean Lands Fund. These grants and loans (with rates 2% or under) are not to exceed 75% of the costs for completing an environmental assessment, cleaning, and redeveloping a contaminated property. Additionally, some properties may be eligible for a property tax reduction or the deferral or forgiveness of any delinquent property taxes.
  • Sustainability Planning and Analysis (Department of Energy and Environment (DOEE)): The grantee should provide analysis and high-level planning in order to meet the goals of the Sustainable DC Plan using the guiding principles of the International Living Future Institute’s Living Community Challenge. The grantee will provide feasibility planning, analysis, and technical guidance to project teams and District agencies involved in planning large development parcels. The grantee should perform at least the following analyses: utility requirements; renewable energy potential; water usage; transportation needs; connection with or integration with the natural environment; integration of healthy materials; stormwater management; and land use. Using the analyses, the grantee should propose plans and strategies that can achieve the 2032 vision of a Sustainable DC.
  • Community Solar Demonstration Project: DOEE seeks eligible entities to develop a model for financing and building Community Solar Projects that can be replicated and used to catalyze the District’s community solar market. The model proposed by potential applicants must be financially sustainable and must clearly demonstrate how private properties can be used to transfer the benefits of renewable energy to low-income District residents. The amount available for the project is approximately $100,000.
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Resiliency Corridors

The goal of a resiliency corridor is to revitalize a community area through methods designed to decrease future costs due to climate change, health hazards, and the contamination of water, air, and soil.  This can be financed by the following methods:

  • Land leases
  • Government retains ownership of a project’s underlying land and leases it to the developer. e.g. Developers enter into a 99-year lease on the property with the municipality as a leaseholder (this defrays hard costs and allows the developer to minimize risks).
  • Subsidizing non-revenue projects/areas with revenue bearing projects/areas
  • Defray costs for developers who use due diligence, strategic planning, and promote community engagement
  • Direct municipal investments are incentives to encourage quicker development to reduce costs. e.g. Building public infrastructure next to potential private developments
  • Fast track government red tape (permitting, zoning, etc.)
  • Pursue grants from various foundations 
  • Enhanced Infrastructure Financing Districts 
  • Insurance Company funding (Insurance lowers costs through prevention/mitigation of risk)
  • Increased sales and/or property tax
  • Low-cost financing from state/city
  • Property assessed clean energy (PACE) financing is a means of financing energy efficiency upgrades, disaster resiliency improvements, water conservation measures, or renewable energy installations of residential, commercial, and industrial property owners.
  • Create smaller more adaptive zones (small business development zone; anchor business retention zone, community facility/residential zone)
  • Create general bonds based on the increase in tax revenue between base value of the property and estimated future value of the property
  • Private Funding: Possible contributors include local Colleges/Universities; corporations interested in reversing blight and/or becoming an anchor tenant
  • Private/Public Partnerships: See if any private actors want to become part of the planning process rather than waiting until the plan is completed and trying to draw them in. This helps fill the gap between expected returns and market returns
  • Federal Funding: Possible contributors include via a Community Development Block Grant (CDBG); the US Economic Development Administration (EDA); the US Department of Agriculture (USDA); and the Environmental Protection Agency (EPA); US Department of Housing and Urban Development (HUD); US Department of Transportation (DOT)
  • Create self-sustaining aspects of the project

A good example of a resiliency corridor focused on preparing an area for climate change is San Francisco’s Islais Creek Southeast Mobility and Adaption Strategy. This strategy focused on collaboration from a bevy of interested parties to create “adaption pathways” which aim to protect a diverse residential and municipal industrial area from floods while also enhancing transportation, jobs, nature, and equity.


Concrete Ideas
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Additional Links
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Concrete Ideas

  • Mixed-use spaces. For example, plan your revitalization plan around one large, mixed-use space with an anchor tenant. Other businesses will come in when the anchor tenant is successful. 
  • Stores catering to community members (Urban stores in urban areas)
  • Transit centers
  • Affordable housing
  • Subsidize your Anchor tenant. This commitment and future success will bring in other businesses
  • Walkable green areas
  • Educational community facilities
  • Museum, Performing Arts Center
  • If you build a renewable energy generator look at Corporate Power Purchase Agreements for a way to sell the power directly to businesses 
  • See also Renewable Energy Certificates
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